FOREX-Dollar at 4-month high vs yen on Fed minutes; euro falls
* Fed minutes revive prospect of U.S. stimulus tapering soon
* Dollar/yen hits highest since July, BOJ maintains loose policy
* Euro hurt by weak French data, ECB easing talk
* Aussie falls; RBA's Stevens says open-minded on intervention
LONDON, Nov 21 (Reuters) - Federal Reserve minutes suggesting policymakers may be able to start scaling back stimulus soon lifted the dollar to a four-month high versus the yen and a one-week high against the euro on Thursday.
The euro was also hurt by data showing French business activity slowed in November, extending a decline that began after an unsourced report on Wednesday that the European Central Bank may consider making banks pay to deposit cash with it overnight. An ECB spokeswoman declined to comment on the report.
Speculation of easier euro zone monetary policy, combined with more hawkish Fed minutes, pointed to a divergence between euro zone and U.S. monetary policy and weighed on the euro.
The poor French data was partly offset by better-than-expected German activity data. The euro was last down 0.1 percent on the day at $1.3428, above an earlier low of $1.3399, its lowest in just over a week.
The euro has dropped sharply since hitting a peak of $1.3584 early on Wednesday.
"This is a double whammy for euro/dollar, with positive dollar news and negative euro news, after two weeks of steady increases in euro/dollar," said Niels Christensen, currency strategist at Nordea.
He still expects the euro to remain within its recent $1.33-$1.36 range for now, staying above the Nov. 7 low of $1.3295 hit after the ECB's unexpected interest rate cut.
Buoyed by the Fed minutes, the dollar reached 100.85 yen , its highest since late July, as U.S. 10-year Treasury yields shot up to a two-month high. It was last up 0.7 percent on the day at 100.75 yen.
"The chance that the Fed will taper its stimulus has started to feel realistic again. It could be as early as December, although that will all depend on the next payrolls data," said a trader at a Japanese bank, referring to the closely watched U.S. jobs data due early next month.
The dollar index hit a one-week high of 81.29, after climbing 0.5 percent on Wednesday in its biggest one-day gain in about two weeks.
The euro rose 0.7 percent versus the yen to 135.25 yen but remained below a four-year high of 135.95 yen set on Wednesday. Sterling hit a four-year high of 162.26 yen.
Investors have used the yen as a funding currency to buy higher-yielding assets thanks to the Bank of Japan's ultra-loose monetary policy. As expected, the BOJ maintained its two-year asset purchase programme on Thursday.
Elsewhere, the higher-yielding Australian dollar fell 0.7 percent to a two-month low of $0.9256 after Reserve Bank of Australia Governor Glenn Stevens said he was "open-minded" on intervention to push the currency lower.
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